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ARTICLES
Chief Judge Rader Calls for Early Damages Assessments and E-Discovery Framework
In a speech last week to Eastern District of Texas Judicial Conference, Chief Judge Rader introduced a Model E-Discovery Order and urged judges and attorneys to develop assessments of damages early in the litigation process. He states: “I recommend that trial judges use their authority, including DAUBERT inquiries, to ascertain early in the case the approximate dollar value of the case… The parties also benefit from early damages discussions and disclosures because it can provide a realistic evaluation of both Defendant’s exposure and Plaintiff’s damages calculation and further promote early and effective mediation. This inquiry can occur at the onset of the case during case management conferences or even a little later in connection with Markman hearings. With an understanding of the case’s true worth, the trial judge would then be poised to identify cases that would benefit from tailoring the standard procedures to fit the case and its significance. In colloquial terms, the court may adjust timing and procedures of the case to make sure a billion-dollar case gets a “billion-dollar’s worth” of process—adequate time and witnesses and confidential information protections and more—and a thousand-dollar case gets . . . well, less.” Source: “The State of Patent Litigation,” Chief Judge Randall R. ... Read MoreRoyalties for “Medical Field In General” Not Sufficiently Comparable
Just as the Federal Circuit has been increasingly strict on requiring prior licensing arrangements to be comparable (Lucent, Uniloc, IP Innovation v. Red Hat), this district court precludes plaintiff’s expert (Lyons) from testifying about “his experience on the medical field as a whole.” The court states: “The court understands Plaintiffs’ argument about relevance under Georgia-Pacific factor 12, but both factor 12 and Uniloc discuss royalty rates for use of the invention and similar inventions. Mr. Lyons’s testimony involved the medical field in general, and devices not comparable to the trocars at issue in this case.” Tyco Healthcare Group LP, et. al. v. Applied Medical Resources Corp., 9-09-cv-00176 (E.D. TX Sepr 23, 2011, Order) (Giblin)On the 25% Rule: Rumors of its Death Were Greatly Exaggerated
Although the “25% Rule” has been largely declared dead, here a district court determined a post-trial royalty rate using the 25% rule as a starting point as per Paice v. Toyota, a commonly cited case for setting the framework for post-trial royalties. Here, a jury had awarded damages to Douglas effectively at a 3.3% rate. In determining a post-verdict royalty rate, the court notes that (a) the infringed patents were by Douglas’s own description “minor” patents, (b) that Douglas could point to no actual lost sales to Buyers, (c) the “royalty should realistically leave some room for profit,” and (d) that a post-verdict royalty should be higher than the pre-verdict royalty, thereby reflecting the change in bargaining positions. The court begins thus: “the court is persuaded to start with the approach used by the district court in Paice. There the court applied ‘the 25% Rule of Thumb,’ which entailed setting the ongoing royalty rate at 25% of Toyota’s 9% profit margin or 2.25%. Paice 609 F.Supp. 2d at 630. Here, 25% of Buyers’ 12.9% profit margin is 3.225%.” The court then adjusts this rate upward, to reflect the change in bargaining positions, to a post-trial rate of 6.225%. In its 2011 decision in ... Read MorePatent Reform Act to Pass
McDermott Will & Emery LLP posted a nice summary of the major provisions of the Patent Reform Act just passed. Hat tip: Amol Parikh. Not surprisingly, their article doesn't discuss damages. As I've touched on previously, that's because the damages issues (which had become rather contentious) have largely been adopted by the courts, and were subsequently removed from the bill. Update: anyone looking for in-depth analysis of the America Invents Act may wish to check out the book THE 2011 PATENT LAW: Law and Practice by Harold Wegner.
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